BEIJING: China's ongoing economic downturn may be the most difficult period companies face as they build a long-term presence there, says a senior FMCG expert.
According to Stephen Maher, President of Mondelez China and President of Sales and E-Commerce AMEA at Mondelez International, overcoming these challenges will be a "defining moment" for any company in becoming "a global company with Chinese characteristics". (For more on how FMCG brands can weather China's economic slowdown, read Warc's report: How to win in China – five lessons from FMCG's frontline.)
Speaking at the recent Retail Congress Asia-Pacific event in Kuala Lumpur, Malaysia, he explained that companies will need to strategise carefully and observed that some brands are failing to learn from history.
"If you walk the stores in China you'll see manufacturers are going back to the old tricks of the 1990s. Doing more line extensions, doing a lot more promotions, and really starting to confuse the consumer," Maher said.
Marketers should also approach China as a "continent, not a country", he advised; they need to understand that a strategy which works in one part of China may not work in another.
"Averages will kill you in China," he said. "It's about the exceptions, and it's about specific areas and what needs to be done versus saying, 'In China we achieve 25% market share'."
That 25% figure might hide a 12% share in one area and a 40% share in another. "It's about knowing how to drive the 12% to the 25%, and the 25% to the 40%," Maher said.
"It's that nuance that really makes the difference to winning in China. An idea in China will work somewhere, but the ability to make profit and extract growth comes from the ability to drive scale."
And, he added, brands must compete where the consumers are, not where they want the consumers to be – China's lower-tier cities will drive future growth, he believes.
According to Stephen Maher, President of Mondelez China and President of Sales and E-Commerce AMEA at Mondelez International, overcoming these challenges will be a "defining moment" for any company in becoming "a global company with Chinese characteristics". (For more on how FMCG brands can weather China's economic slowdown, read Warc's report: How to win in China – five lessons from FMCG's frontline.)
Speaking at the recent Retail Congress Asia-Pacific event in Kuala Lumpur, Malaysia, he explained that companies will need to strategise carefully and observed that some brands are failing to learn from history.
"If you walk the stores in China you'll see manufacturers are going back to the old tricks of the 1990s. Doing more line extensions, doing a lot more promotions, and really starting to confuse the consumer," Maher said.
Marketers should also approach China as a "continent, not a country", he advised; they need to understand that a strategy which works in one part of China may not work in another.
"Averages will kill you in China," he said. "It's about the exceptions, and it's about specific areas and what needs to be done versus saying, 'In China we achieve 25% market share'."
That 25% figure might hide a 12% share in one area and a 40% share in another. "It's about knowing how to drive the 12% to the 25%, and the 25% to the 40%," Maher said.
"It's that nuance that really makes the difference to winning in China. An idea in China will work somewhere, but the ability to make profit and extract growth comes from the ability to drive scale."
And, he added, brands must compete where the consumers are, not where they want the consumers to be – China's lower-tier cities will drive future growth, he believes.
Data sourced from Warc
